IUC Tax on Leased Vehicles: Legal Presumptions and Financial Leasing Liability (CAAD 133/2018-T)

ARBITRAL DECISION

I – Report

1.1. Bank A..., S.A., legal entity no. ..., with registered office at Rua..., ..., ...-... Lisbon (hereinafter referred to as "Claimant"), having been notified of 4 additional assessment acts for IUC (identified in the list "Annex A"), relating to 4 vehicles and referring to the years 2014 and 2015, filed, on 21/3/2018, a request for constitution of an arbitral tribunal and for an arbitral decision, pursuant to article 2.º, no. 1, al. a), and 10.º et seq. of Decree-Law no. 10/2011, of 20/1 (Legal Regime of Arbitration in Tax Matters, hereinafter referred to only as "RJAT"), in which the Tax and Customs Authority (AT) is named as defendant, with a view to the "declaration of illegality of the 4 assessment acts relating to IUC in question, concerning the 4 vehicles identified [...]; and likewise, the acts refusing the administrative appeals relating to the aforementioned assessment acts. Thus requesting the reimbursement of the amount of €901.90, relating to tax and compensatory interest unduly paid by the Claimant, as well as the payment of compensatory interest for the deprivation of the said amount of €901.90, pursuant to article 43.º of the General Tax Law."

1.2. On 1/6/2018 the present Singular Arbitral Tribunal was constituted.

1.3. Pursuant to article 17.º, no. 1, of the RJAT, the AT was served, as respondent party, to file its answer. The AT filed its answer on 21/6/2018, having argued in favor of the total lack of merit of the claimant's request.

1.4. By order of 12/10/2018, the Tribunal considered, pursuant to article 16.º, als. c) and e), of the RJAT, that the meeting referred to in article 18.º of the RJAT was not necessary and that the case was ready for decision. The date of 19/10/2018 was also set for the delivery of the arbitral decision.

1.5. The Arbitral Tribunal was duly constituted, is materially competent, the case is free from defects that would invalidate it, and the Parties have legal personality and capacity, being thus legitimate.

II – Allegations of the Parties

2.1. The Claimant alleges, in its initial petition, that: a) "underlying these proceedings is essentially a single question: whether the circumstance that the transfer of the vehicles described in Annex A to their former lessees (or, in specific cases, to third parties designated by them), upon termination of the financial leasing or long-term rental contract, was not registered with the CRA, makes such transfer unenforceable against the AT, for the purpose of collecting the respective tax from its former owner"; b) "the responsibility for paying the IUC assessments now being contested does not fall, nor has it ever fallen, upon the Claimant"; c) "as case law (particularly arbitral case law) has stressed, not even during the term of a financial leasing or long-term rental contract should the lessor entity be considered the taxpayer of the IUC. Consequently, and a fortiori, even less so after the contract has ended and the lessee has exercised its right to acquire the asset for the residual value, plus costs and VAT. In these circumstances, the lessees become owners of the vehicles in question, and the provisions of article 3.º, no. 1, of the IUC Code become applicable to them"; d) "from the moment when the lessees acquire the vehicles, it is only upon them, now as owners thereof, that the obligation to pay the IUC and other associated charges falls"; e) "thus, the assessments made in the Claimant's case would only be understandable [...] if everything functioned for the AT as if no transfer had taken place, since none was registered. In this scenario, it is therefore necessary to determine whether the argument that the lack of registration of the transfer effected between the Claimant and the lessees makes it unenforceable against the AT should proceed"; f) "«given that the payment of IUC is at issue, and the Tax Authority is not encompassed within the concept of third party for registration purposes, since it does not acquire from the same transferor rights totally or partially incompatible with the rights of the purchaser, it is readily concluded that it cannot shield itself in the absence of registration of the transfer to demand payment of the tax due by the former owner, whether that be a lessor or any other person or entity.»"; g) "«In summary, once a contract of sale of the leased vehicle is concluded in favor of the lessee, the latter acquires ownership thereof by mere effect of the contract, and, at the same time, the status of IUC taxpayer, now no longer as a lessee holding a purchase option, but as an owner in full right. If the owner does not immediately proceed to register the ownership in their name, it is presumed that ownership continues to belong to the seller (art. 7.º of the CRP), but this presumption is relative, that is, it may be rebutted by evidence to the contrary. Only third parties for registration purposes who act in good faith may avail themselves of the absence of registration to (attempt to) acquire rights over the unregistered asset. However, the Tax Authority does not meet the legal requirements of the concept of third party for registration purposes (provided for in art. 5.º, no. 4, of the CRP), for which reason it cannot demand from the seller payment of the tax due by the buyer (owner) from the moment the presumption of art. 7.º is rebutted by proof of the respective sale.»"; h) "the considerations above exposed – which the Claimant subscribes to in their entirety, without reservation – necessarily lead to the conclusion that the AT cannot use the argument of lack of registration of transfer to demand the missing tax from the Claimant"; i) "the lack of registration does not affect the validity of the contract of sale but only its efficacy, and even this only vis-à-vis third parties in good faith for registration purposes; a qualification that the AT undoubtedly does not assume in the present case. It is concluded, therefore, that the registration of the acquisition of motor vehicles with the Commercial Registry is not a condition for the transfer of ownership, nor does it affect its validity"; j) "for this reason, therefore, the IUC assessment acts attributable to the Claimant should be considered illegal and consequently annulled, which is expressly requested herein"; l) "the invoices already attached by the Claimant appear to be sufficient to prove the transfer of the motor vehicle in question, moreover enjoying the presumption of truthfulness to which reference was made above"; m) "the aforementioned assessments are the exclusive and sole responsibility of the AT, which, thus, cannot fail to be held responsible for the payment of compensatory interest and for the assumption of arbitral costs."

2.2. The Claimant concludes that the "illegality of the 4 assessment acts relating to IUC in question, concerning the 4 vehicles identified [...]; and likewise, the acts refusing the administrative appeals relating to the aforementioned assessment acts, should be declared. Thus requesting the reimbursement of the amount of €901.90, relating to tax and compensatory interest unduly paid by the Claimant, as well as the payment of compensatory interest for the deprivation of the said amount of €901.90, pursuant to article 43.º of the General Tax Law."

2.3. For its part, the Respondent alleges, in its answer, that: a) there is a "skewed reading of the wording of the law" on the part of the Claimant; b) the interpretation thereof "does not take into account the systematic element, violating the unity of the regime established throughout the IUC Code"; c) the interpretation of the Claimant "ignores the ratio of the regime established in the article in question and likewise throughout the IUC Code"; d) "the tax legislator, in establishing in article 3.º, no. 1, who are the taxpayers of the IUC, expressly and intentionally established that these are the owners (or in the situations provided in no. 2, the persons enumerated therein), being considered as such the persons in whose names the same are registered"; e) "if it were understood that in using the expression «considered as» the legislator had established a presumption, practically all rules of incidence in the context of corporate income tax would be set aside precisely because accounting prescribes solutions different from those of the Corporate Income Tax Code, and this is exactly the legislator's purpose to set aside such accounting rules. Should this be the case, the entire useful effect of the referred rules would be frustrated"; f) "in these terms, it is imperative to conclude that, in the case of the present arbitral proceedings, the legislator expressly and intentionally established that those [as owners or in the situations provided in no. 2, the persons enumerated therein] are considered as such the persons in whose names the same [the vehicles] are registered, because this is the interpretation that preserves the unity of the legal-fiscal system"; g) "in view of this wording it is not manifestly possible to invoke that this is a presumption, as the Claimant argues. Rather, it is a clear choice of legislative policy adopted by the legislator, whose intention, within its legislative discretion, was that, for purposes of IUC, those who appear as such in the motor vehicle register be considered owners"; h) "in summary, article 3.º of the IUC Code does not contain any legal presumption"; i) "the systematic element of interpretation of the law also demonstrates that the solution advocated by the Claimant is untenable, finding the understanding endorsed by it no support in the law"; j) "even admitting that, from the point of view of the rules of civil law and property registration, the absence of registration does not affect the acquisition of the status of owner and that registration is not a condition of validity of contracts with real efficacy, as provided in the IUC Code (which in the case at issue constitutes special law, which, under the general rules of law, derogates from the general rule), the tax legislator deliberately and expressly desired that those considered as owners, lessees, purchasers with reservation of ownership, or holders of the right to purchase options in long-term rental, be the persons in whose names the vehicles are registered"; l) "in light of a teleological interpretation of the regime established throughout the IUC Code, the interpretation advocated by the Claimant to the effect that the taxpayer of the tax is the effective owner, independent of not appearing in the motor vehicle register as having that status, is manifestly erroneous. And it is an erroneous interpretation insofar as it is the very ratio of the regime established in the IUC Code that constitutes clear proof that what the tax legislator intended was to create a tax based on the taxation of the owner of the vehicle as it appears in the motor vehicle register"; m) "the tax acts in dispute do not suffer from any defect of violation of law, insofar as in light of the provisions of article 3.º, nos. 1 and 2, of the IUC Code and article 6.º of the same code, it was the Claimant, in its capacity as owner, who was the taxpayer of the IUC"; n) "accepting that it is admissible to rebut the presumption in light of the case law already established at this arbitration center, it is still necessary to evaluate the documents filed by the Claimant and their evidentiary value with a view to such rebuttal"; o) "would the financial leasing contracts and invoices constitute sufficient evidence to rebut the (alleged) legal presumption established in article 3.º of the IUC Code? Clearly not [...]. The invoices are not apt to prove the conclusion of a synallagmatic contract such as a sale, because such documents do not, by themselves, reveal an essential and unequivocal declaration of intent (i.e., acceptance) on the part of the purported buyers"; p) "the Claimant did not attach copies of the said official form for registration of motor vehicle ownership when it could and should have done so, that is, in the request for arbitral proceedings, now finding itself precluded from doing so at a later date"; q) "in summary, the Claimant failed to prove the alleged transfer of the vehicles in question"; r) "were the interpretation conveyed by the Claimant to be accepted, then it would appear to be contrary to the Constitution, insofar as such interpretation results in the violation of the principle of trust, the principle of legal certainty, the principle of efficiency of the tax system, and the principle of proportionality"; s) "the transfer of ownership of motor vehicles is not susceptible of being controlled by the Respondent, since there is no declarative ancillary obligation regarding this matter, unlike the control that can be carried out, for example, via the prior payment of Municipal Tax on Transfer of Real Property in the matter of transfer of real property. This means, therefore, that the IUC is assessed in accordance with the registration information duly transmitted by the Institute of Records and Notarization. In other words, the IUC is not assessed in accordance with information generated by the Respondent itself"; t) "consequently, the Claimant should be condemned to pay the arbitral costs arising from the present request for arbitral proceedings, pursuant to article 527.º/1 of the CPC ex vi article 29.º/1-e) of the RJAT [...]. The same reasoning applies with respect to the request for condemnation to payment of compensatory interest filed by the Claimant"; u) "from all that has been stated above, it is clear that the tax acts in dispute are valid and legal, because they conform to the legal regime in force at the date of the taxable facts, so, in this case, there was no error attributable to the services. Thus, the legal prerequisites that confer the right to compensatory interest are not met."

2.4. The Respondent concludes that "the request for arbitral proceedings should be judged to lack merit, with the tax assessment acts in dispute remaining in the legal system and the Respondent being absolved, accordingly, of the request."

III – Proven Facts, Unproven Facts, and Respective Justification

3.1. The following facts are considered proven:

i) A substantial part of the activity of the Claimant is reduced to the conclusion of financial leasing or long-term rental (ALD) contracts, intended for the acquisition, by companies and individuals, of motor vehicles.

ii) The vehicles identified in the list of "Annex A" attached to these proceedings (whose license plates are listed in the same and are hereby reproduced) were leased and sub-leased in long-term rental, by the claimant, to the customers also identified therein (see contracts contained in docs. 1 to 4 appended to these proceedings).

iii) On the date of termination of the mentioned contracts, the lessees of the said vehicles decided to exercise their purchase option, as legally and contractually provided. As demonstrated by the analysis of the sales invoices filed as docs. 5 to 8 attached to these proceedings, the lessees became owners of the vehicles in question, having proceeded to pay the respective residual value.

iv) In light of the referred list of "Annex A", it is found, in summary, that, on the date of:

1. assessment 2015..., of 2015 (month of registration October), the lessee and (the new) owner of "vehicle 1" was B... (see date of sale indicated) – see docs. 1 and 5 attached to these proceedings;

2. assessment 2015..., of 2015 (October), the lessee and (the new) owner of "vehicle 2" was "C..., Lda." (see date of sale indicated) – see docs. 2 and 6;

3. assessment 2015..., of 2015 (February), the lessee and (the new) owner of "vehicle 3" was D... (see date of sale indicated) – see docs. 3 and 7;

4. assessment 2016..., of 2014 (February), the lessee and (the new) owner of "vehicle 4" was E... (see date of sale indicated) – see docs. 4 and 8.

v) The Claimant was notified to proceed with payment of the IUC to which the additional assessment acts identified in the table contained in "Annex A" relate, the amounts in question having been paid, in the total amount of €901.90, as attested by the payment receipts filed as docs. 9 to 12.

vi) Not conforming to the said additional assessments, the Claimant filed the present request for arbitral proceedings on 21/3/2018.

3.2. There are no facts unproven that are material to the decision of the case.

3.3. The facts considered pertinent and proven (v. 3.1) are based on the analysis of the positions exposed by the parties and the documentary evidence attached to these proceedings.

IV – Regarding the Law

In the present case, there are four disputed questions of law: 1) whether article 3.º of the IUC Code contains a presumption and whether the rebuttal thereof was made; 2) whether, as the AT claims, the interpretation of the Claimant does not take into account the systematic and teleological elements of interpretation of the law; 3) whether, as the AT also claims, "the interpretation conveyed by the Claimant [...] appears to be contrary to the Constitution"; and 4) whether the requested compensatory interest is owed. A final note will address the question of responsibility for payment of arbitral costs.

Let us then proceed.

1. and 2) The first two questions of law converge in the direction of interpretation of article 3.º of the IUC Code, so it is necessary to: a) determine whether the rule on subjective incidence, contained in the said article 3.º, establishes or does not establish a presumption; b) ascertain whether, when it is considered that this rule establishes a presumption, such violates the "unity of the regime" or disregards the systematic element and the teleological element; c) ascertain – admitting that the presumption exists (and that it is a rebuttable presumption) – whether the rebuttal thereof was made.

a) Article 3.º, nos. 1 and 2, of the IUC Code has the following wording, which is reproduced herein:

"Article 3.º – Subjective Incidence

1 - The taxpayers of the tax are the owners of the vehicles, being considered as such the natural or legal persons, of public or private law, in whose names the same are registered.

2 - Equated with owners are financial lessees, purchasers with reservation of ownership, as well as other holders of purchase option rights by virtue of the leasing contract".

The interpretation of the cited legal text is, naturally, essential for the resolution of the case under analysis. Accordingly, it is necessary to resort to article 11.º, no. 1, of the LGT (General Tax Law), and, by reference thereto, to article 9.º of the Civil Code (CC).

Now, pursuant to the said article 9.º of the CC, interpretation departs from the wording of the law and seeks, through it, to reconstitute the "legislative thought." The same is to say (regardless of the objectivism-subjectivism controversy) that literal analysis is the basis of the interpretive task and the systematic, historical, or teleological elements are guides for orientation of the said task.

The literal apprehension of the legal text in question does not generate – even though the separation of this from the determination, even if minimal, of the respective meaning is very arguable – the notion that the expression "considered as such" means something different from "presumed as such." Indeed, it would be very difficult to find authors who, in a task of pre-understanding of the said legal text, would instinctively reject the identity between the two expressions.

Confirming the indistinction (both literal and in meaning) of the words "considering" and "presuming" (presumption), see, for example, the following articles of the Civil Code: 314.º, 369.º, no. 2, 374.º, no. 1, 376.º, no. 2, and 1629.º. And, with particular interest, the case of the expression "considers itself," contained in article 21.º, no. 2, of the Corporate Income Tax Code (CIRC). As note Diogo Leite Campos, Benjamim Silva Rodrigues, and Jorge Lopes de Sousa, regarding that article of the CIRC: "in addition to this rule evidencing that what is at issue in the taxation of capital gains is to determine the real value (the market value), the limitation to the determination of the real value derived from the rules for determination of the taxable value provided in the Income Tax Code cannot but be considered as a presumption regarding incidence, whose rebuttal is permitted by article 73.º of the LGT" (General Tax Law, Annotated and Commented, 4th ed., 2012, pp. 651-2).

b) These are only some examples that allow the conclusion that it is precisely for reasons related to "unity of the legal system" (the systematic element) that one cannot affirm that only when the verb "presume" is used is there a presumption, given that the use of other terms or expressions (literally similar) can also serve as the basis for presumptions. And among these, the expressions "considered as" or "considering as" assume, as seen, prominence.

If literal analysis is merely the basis of the task, it is naturally essential to evaluate the text in light of the other elements (or sub-elements of the so-called logical element). In this regard, the AT argues that "the systematic element of interpretation of the law also demonstrates that the solution advocated by the Claimant is untenable, finding the understanding endorsed by it no support in the law," and "in light of a teleological interpretation of the regime established throughout the IUC Code, the interpretation advocated by the Claimant [...] is manifestly erroneous."

It is therefore justified to ascertain whether the interpretation that considers the existence of a presumption in article 3.º of the IUC Code collides with the teleological element, that is, with the purposes (or with the sociological relevance) of what was intended with the rule in question. Now, such purposes are clearly identified at the beginning of the IUC Code: "The single circulation tax obeys the principle of equivalence, seeking to burden taxpayers to the extent of the environmental and road cost that they cause, in implementation of a general rule of tax equality" (see article 1.º of the IUC Code).

What can be inferred from this article 1.º? It can be inferred that the close connection of the IUC to the principle of equivalence (or principle of benefit) does not permit the exclusive association of the "taxpayers" mentioned therein to the figure of owners but rather to the figure of users (or of economic owners). As was well noted in the Arbitral Decision of case no. 73/2013-T: "indeed, the ratio legis of the tax [IUC] rather points to the direction that users of the vehicles should be taxed, the «economic owner» in the words of Diogo Leite de Campos, the actual owners or financial lessees, because these are those who have the polluting potential causing the environmental costs to the community."

Indeed, if the said ratio legis were otherwise, how would one understand, for example, the obligation (on the part of entities that proceed to rent vehicles) – and for purposes of the provisions of article 3.º of the IUC Code and article 3.º, no. 1, of Law no. 22-A/2007, of 29/6 – to provide to the Directorate-General of Taxes the data regarding the tax identification of the users of the said vehicles (see article 19.º)? Would it be that where it says "users," it should instead read, disregarding the systematic element, "owners with registration in their name"...?

c) From the foregoing, it can be concluded that limiting the taxpayers of this tax only to the owners of the vehicles in whose names the same are registered – ignoring situations in which these no longer coincide with the actual owners or the actual users thereof – constitutes a restriction that, in light of the purposes of the IUC, finds no basis of support. And, even though the AT argues that the "choice [...] adopted by the legislator [...] was that, for purposes of IUC, those who appear as such in the motor vehicle register be considered owners," it is necessary to bear in mind that such register, in view of what was said above, generates only a rebuttable presumption, that is, a presumption that may be rebutted if evidence to the contrary is presented. In this sense, see, for example, the Decision of the Administrative Court of Appeals of the South of 19/3/2015, case 8300/14: "The [...] article 3.º, no. 1, of the IUC Code, establishes a legal presumption that the holder of the motor vehicle register is its owner, such presumption being rebuttable."

It would, indeed, be unjustified to impose a kind of irrebuttable presumption, since, without an apparent reason, one would be imposing a (admittedly disputable) formal truth to the detriment of what could actually be proven; and, on the other hand, it would set aside the duty of the AT to comply with the principle of official investigation established in article 58.º of the LGT, that is, the duty to conduct the necessary proceedings for a correct determination of the factual reality on which its decision must be based (which means, in the present case, the determination of the current and actual owner of the vehicle).

Furthermore, if the seller were not permitted to rebut the presumption contained in article 3.º of the IUC Code, one would be benefiting, without a plausible reason, purchasers who, in possession of properly completed and signed purchase contract forms, and enjoying the advantages associated with their status as owners, would attempt to evade, by way of a "formalism of registration," the payment of tolls or fines.

In this regard, it is also worth noting that the registration of vehicles does not have constitutive efficacy, functioning, as was said before, as a rebuttable presumption that the holder of the register is, effectively, the owner of the vehicle. In this sense, see, for example, the Decision of the Supreme Court of Justice of 19/2/2004, case 03B4639: "Registration does not have constitutive efficacy, since it is intended to give publicity to the registered act, functioning (only) as a mere presumption, rebuttable (presumption «juris tantum») of the existence of the right (arts. 1.º, no. 1 and 7.º, of the CRP and 350.º, no. 2, of the C.Civil) as well as of the respective ownership, all in accordance with what is contained therein."

In the same sense, the Arbitral Decision of 15/10/2013, issued in case no. 14/2013-T, stated, in terms that are endorsed: "the essential function of motor vehicle registration is to give publicity to the legal situation of the vehicles, the registration not having constitutive efficacy, functioning (only) as a mere rebuttable presumption of the existence of the right, as well as of the respective ownership, all in accordance with what is contained therein. The presumption that the registered right belongs to the person in whose name it is inscribed can be rebutted by evidence to the contrary. Not meeting the AT the requirements of the notion of third party for registration purposes [circumstance that could prevent the full efficacy of the contracts of sale concluded], it cannot prevail itself of the absence of updating of the registration of the right of ownership to call into question the full efficacy of the contract of sale and to demand from the seller (former owner) payment of the IUC due by the buyer (new owner) from the moment the presumption of the respective ownership is rebutted through sufficient proof of the sale."

Now, it is verified, in the case here under analysis, that the rebuttal of the said presumption, by presenting evidence to the contrary (see article 73.º of the LGT and article 350.º, no. 2, of the Civil Code), was made, given that the sales invoices were presented (see docs. 5 to 8), as well as the financial leasing contracts (see docs. 1 to 4).

Although those invoices were not accompanied by any proof of payment (but it is also true that no element was presented in these proceedings in a manner that would allow, with foundation, to doubt the truthfulness thereof), the presentation and analysis of the leasing contracts allow the conclusion – as occurred, for example, in the recent Arbitral Decision of 24/11/2017, issued in case no. 430/2017-T – that "such contracts lead to the supposition of the transfer of ownership and use of the vehicles in question, [whereby it is] understood [...] that responsibility for payment of IUC is attributable to the lessees of those vehicles and not to the Claimant, as results from the provisions of article 3.º, no. 2, of the IUC Code, and the assessment acts corresponding to the identified vehicles should be annulled."

It should also be noted that, despite what was said regarding the absence of payment receipt, the invoices filed with these proceedings nonetheless constitute evidence of the facts alleged by the Claimant. Indeed, as is well stated, for example, in the recent Arbitral Decision of 18/12/2017, issued in case no. 425/2017-T: "so long as [the invoices are] issued in legal form and constitute elements supporting the accounting entries in accounting organized in accordance with commercial and tax legislation, the data contained therein are covered by the presumption of truthfulness referred to in article 75.º, no. 1, of the LGT. Considered, therefore, the relevance attributed by tax legislation to invoices issued, in accordance with the law, by commercial companies in the course of their business activity and the presumption of truthfulness of the operations for which they are the evidence, it cannot but be considered that they themselves can constitute, alone, sufficient proof of the transfers invoked by the Claimant."

In this same sense, see, furthermore, for example, the recent Arbitral Decision of 8/1/2018, issued in case no. 258/2017-T: "The rebuttal of the legal presumption follows the rule contained in article 347.º of the C. Civil, pursuant to which legal full proof can only be contradicted by means of proof that shows the fact of which it is the object is not true. This means that it is not enough for the opposing party to present mere counter-proof – which is intended to cast doubt on the facts (see article 346.º of the C.Civil) that make the presumed facts doubtful; rather, it must show that the presumed fact is not true, so that there remains no uncertainty that the facts resulting from the presumption are not real. Now, the invoice constitutes a documentary record prepared within the company and intended for the outside, particularly for the AT, which draws all the effects inherent thereto in the context of evaluation for the incidence of various taxes. Therefore, unless its falsity is demonstrated, invoices are presumed to be valid for all legal effects, and they cannot but be so, simply and solely, as a means of proof of the transaction, relevant for purposes of incidence of IUC. [...]. It is thus concluded, by the admission of proof of the sale of a motor vehicle through demonstration of the existence of the issuance of a valid invoice. [...]. The documentary elements attached to these proceedings enjoy the presumption of truthfulness conferred upon them by the aforesaid article 75.º, no. 1, of the LGT, thus having suitability and sufficient force to rebut the presumption that supported the assessments made based solely, as the Law provides, on motor vehicle registration. These operations of transfer of apparent ownership are enforceable against the Tax and Customs Authority, because, although the facts subject to registration only produce effects in relation to third parties when registered, in view of the provisions of article 5.º, no. 1, of the Property Registration Code [applicable by reference from the Motor Vehicle Registration Code], the Tax Authority is not a third party for purposes of registration, since it is not in the situation provided in no. 2 of the said article 5.º of the Property Registration Code, applicable by force of the Motor Vehicle Registration Code, that is, it did not acquire from a common ancestor rights incompatible with each other." (Italics ours.)

In light of the foregoing, and taking into account the elements brought before these proceedings and (also) identified above, it is considered that the Claimant rebutted the presumption contained in article 3.º of the IUC Code – whereby, consequently, the IUC assessment acts challenged here should be annulled.

1. It is concluded, considering the foregoing [see 1) and 2)], that there was no interpretation "contrary to the Constitution," contrary to what is alleged by the Respondent in points 107.º to 115.º of its answer.

2. It now falls to evaluate, under article 24.º, no. 5, of the RJAT, the request for payment of compensatory interest in favor of the claimant (article 43.º of the LGT and 61.º of the Tax Procedure Code).

In this regard, it was recalled, rightly, by the Arbitral Decision of 19/7/2013, issued in case no. 26/2013-T (a decision relating to a situation similar to the one under consideration): "The right to compensatory interest referred to in the above rule of the LGT presupposes that tax has been paid in an amount higher than that due and that such derives from an error, of fact or of law, attributable to the services of the AT. [...] even if it is acknowledged that the tax paid by the claimant is not due, because the claimant is not the taxpayer of the tax obligation, thus determining its respective refund, it is not apparent that, in its origin, is found the error attributable to the services, which determines such right [to compensatory interest] in favor of the taxpayer. Indeed, in promoting the official assessment of the IUC considering the claimant as the taxpayer of this tax, the AT merely limited itself to complying with the rule of no. 1 of article 3.º of the IUC Code, which, as abundantly mentioned above, imputes such status to persons in whose names the vehicles are registered."

Given this justification, with which it is agreed, it is concluded, also in the present case, in favor of the lack of merit of the aforementioned request for payment of compensatory interest.

Responsibility for Payment of Arbitral Costs

The Respondent argues, in point 129.º of its answer, that "the Claimant [should] be condemned to pay the arbitral costs," given that "from all that has been stated above, it is clear that the tax acts in dispute are valid and legal, because they conform to the legal regime in force at the date of the taxable facts, so, in this case, there was no error attributable to the services." (see point 132.º of the mentioned answer).

Now, in this regard, it is necessary to bear in mind that, as is well referred to in the Arbitral Decision of 6/10/2014 (in case no. 241/2014-T), "the law is conclusive in the allocation of responsibility for payment of costs to the party that is condemned, in light of the provisions of nos. 1 and 2 of article 527.º of the Code of Civil Procedure, applicable by force of article 29.º, no. 1, al. e), of the RJAT." (In the same sense, see, for example, the Arbitral Decision of 4/11/2014, in case no. 231/2014-T, or the Arbitral Decision of 17/11/2014, in case no. 171/2014-T.)

In the case of these proceedings, given that the Claimant's request was successful (see above), it is concluded that the Respondent is entirely responsible for payment of the costs.

V – DECISION

In light of the foregoing, it is decided:

– That the request for arbitral proceedings is well-founded, with the consequent annulment, with all legal effects, of the IUC assessments challenged and the reimbursement of the amounts unduly paid.

– That the request is dismissed insofar as it concerns the recognition of the right to compensatory interest in favor of the claimant.

The value of the case is set at €901.90 (nine hundred one euros and ninety cents), pursuant to article 32.º of the Administrative Court Procedure Code and article 97.º-A of the Tax Procedure Code, applicable by force of the provisions of article 29.º, no. 1, als. a) and b), of the RJAT, and article 3.º, no. 2, of the Regulations for Costs in Tax Arbitration Proceedings (RCPAT).

Costs charged to the respondent in the amount of €306.00 (three hundred six euros), pursuant to Table I of the RCPAT, and in compliance with the provisions of articles 12.º, no. 2, and 22.º, no. 4, both of the RJAT, and the provisions of article 4.º, no. 5, of the cited Regulation.

Notify accordingly.

Lisbon, 19 October 2018.

The Arbitrator

(Miguel Patrício)

Text prepared by computer, pursuant to the provisions of article 131.º, no. 5, of the Code of Civil Procedure, applicable by reference from article 29.º, no. 1, al. e), of the RJAT.

The drafting of the present decision is governed by the spelling prior to the Orthographic Agreement of 1990.